The 2013 Berkshire Hathaway Annual Meeting is tomorrow and, while a few friends are attending, sadly I’m not. This particular one should be very interesting as Buffett introduces another great feature to the Q&A session: there will be a “Berkshire bear” asking tough, unscripted questions live. The task fell on Doug Kass, who says he’s been working very hard to come up with tough questions. At a time when annual meetings seem to discourage transparency, the Berkshire meeting keeps improving.
On other news, Berkshire is paying US$ 2bi for the 20% of Iscar it didn’t already own. Given that it paid US$ 4bi for the first 80%, it’s clear – as Buffett himself pointed out – how much the company has grown. In fact Buffett has had nothing but the highest praise for Iscar’s management.
Wall Street Journal points out the obvious in this story (and video): Warren Buffett has no problems paying his managers extremely well – as long as they deliver on intelligently-set targets for key performance indicators aligned with the company’s strategy. One would think that’s the norm, but obviously it’s easier said than done. However this is a subject (incentives and management compensation) on which Buffett’s thinking is pretty clear and, well, brilliant. Just read the annual letters ober the years on that subject and look at Berkshire’s subsidiaries’ performances over time – and lack of executive turnover despite those guys’ sometimes huge personal wealth – and make your own conclusions on whether Buffett’s views work.
Finally, Morningstar attempts a primer on how to value Berkshire and, while providing a few checks on the non-insurance business, fails to deliver on its promise – especially when looking at the insurance business.